While President Trump previewed pieces of his “America First” budget plan a couple weeks ago, asking Congress for a $54 billion increase in defense spending, the details of the plan weren’t revealed until Thursday. Now that the plan is available for public scrutiny, it looks like Trump’s America First may find resistance on both sides of the aisle. What’s the plan look like? Where is the biggest resistance likely to come from?
Who are the Casualties of Trump’s America First Budget?
President Trump has made a pretty clear statement that he wants to focus on defense spending with his new America First plan. What wasn’t clear is where those funds are supposed to come from.
Now we know.
Trump has proposed what the administration calls a “hard-power” budget. The goal of the plan is to put into play Trump’s priorities without increasing the fiscal 2018 deficit or national debt. And those priorities are the military – and most definitely not the environment in any way, shape, or form.
Trump’s biggest budget cut in his proposal would be to the Environmental Protection Agency. The president is proposing a 31% cut to the EPA to help cover the $54 billion boost in Pentagon spending.
Trump is also budgeting into the plan $1.5 billion in 2017 and $2.6 billion in 2018 for his border wall which he said Mexico would pay for.
Other cuts would come to the US State Department, which would see its budget slashed by 28%.
The Department of Agriculture also gets slashed, by 20.7%, along with the Labor Department (20.7%), Alternative Energy Dept (17.9%), Health and Human Services (down 17.9%), Commerce Department (down 15.7%), and Department of Education, which would be slashed by 13.5%.
Departments of Transportation (12.7%), Interior (11.7%), Energy (5.6%), Treasury (4.4%), and Justice (3.8%) would also all see budget cuts for 2018. The administration will also look to cut out all federal support for Public Broadcasting Service (PBS).
How will the plan play out in Congress?
Key Republicans such as Senate Majority Leader Mitch McConnell have already rejected the idea of deep cuts to the State Department while Democrats will vehemently oppose any social programs being cut.
The president’s new budget would require legislation to alter spending caps that congressional Republicans and Democrats agreed to during President Barack Obama’s second term.
That legislation is subject to filibuster.
Trump needs 60 votes to get approval, which would mean that he needs to convert 8 Democrat Senators – assuming that all Republicans join him, which is a long shot at the moment.
The current plan leaves unanswered questions about tax cuts, entitlement spending and economic growth forecasts, which should be answered in May, when the White House releases its full budget.
Watch this video from ABC News where Mick Mulvaney discusses President Trump’s new budget proposal:
For now, traders would do well to stick with trading publicly traded defense stocks, such as Heico Corp. (HEI, HEI-A), Raytheon Co. (RTN), and General Dynamics Corp. (GD), all of which should continue to rise as Trump pushes to boost the military.
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